The global merchant raised $285 million in 2007 with an issue of hybrid securities at $100 each. It is obliged to buy back the hybrids if it wishes to alter the company's capital structure.
Investor representative Graham Critchley told a meeting of hybrid holders that Price would mount a campaign to persuade holders that their securities were worth very little so he could acquire them at a fraction of their value. The securities are currently valued at $44-77, said Critchley.
He added that Price was desperate to reclaim the securities, because he would find it very difficult to raise money and grow Paperlinx while it had a $285 million liability on its balance sheet.
Critchley said hybrid holders would be "ripped off" unless they united and resisted any push to sell at cheap prices.
He also told the Sydney meeting that Price would make a windfall if he could return Paperlinx to profit after buying a lot of stock at cheap prices.
"That's got to be one of the best deals in recent times if he can turn Paperlinx around and get rid of us quickly," he said.
[Related: Shock as Price joins Paperlinx]
Price told ProPrint that he couldn't comment on the 22 November meeting because he wasn't there.
He said the board's position on hybrid securities was that "we are engaging and discussing options with a number of parties and have formed no view as to what the outcome will be. However, the directors recognise and take seriously their paramount obligations to the company and its shareholders."
Price also said: "The reason I became actively involved in Paperlinx is that I see a bright long-term future for this business to grow. There are some short-term issues we have to address [and] we're now doing that. This growth will require capital."
Ironically, the more that Price and the new board manage to put Paperlinx back on track, the higher the value of the hybrids could go.
Critchley told the meeting that he expected the value of the hybrids to rise because Price looked likely to improve Paperlinx's fortunes.
Meanwhile, Paperlinx announced today that chief financial officer Richard Barfield had left the company, with a replacement "expected to be announced shortly".
[Related: Ups and downs of Paperlinx]
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